Pfizer Inc.
`2009 Financial Report
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`WATSON LABORATORIES, INC. ,
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`WATSON LABORATORIES, INC. , IPR2017-01621, Ex. 1127, p. 2 of 110
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
`
`Introduction
`Our Financial Review is provided to assist readers in understanding the results of operations, financial condition and cash flows of
`Pfizer Inc. (the Company). It should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated
`Financial Statements. The discussion in this Financial Review contains forward-looking statements that involve substantial risks and
`uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of
`various factors such as those discussed in Part 1, Item 1A, “Risk Factors” of our 2009 Annual Report on Form 10-K and in the
`“Forward-Looking Information and Factors That May Affect Future Results” section of this Financial Review.
`
`The Financial Review is organized as follows:
`
`(cid:129) Overview of Our Performance and Operating Environment. This section provides information about the following: our business; our
`2009 performance; our operating environment, strategy and response to key opportunities and challenges; our cost-reduction
`initiatives; our strategic initiatives, such as acquisitions, dispositions, licensing and collaborations; and our financial guidance for 2010
`and our financial targets for 2012.
`
`(cid:129) Accounting Policies. This section, beginning on page 8, discusses those accounting policies that we consider important in
`understanding Pfizer’s consolidated financial statements. For additional discussion of our accounting policies, see Notes to
`Consolidated Financial Statements—Note 1. Significant Accounting Policies.
`
`(cid:129) Acquisition of Wyeth. This section, beginning on page 11, discusses our acquisition of Wyeth, the use of fair value and the recognition
`of assets acquired and liabilities assumed in connection with our acquisition of Wyeth. For additional details related to the acquisition of
`Wyeth, see Notes to Consolidated Financial Statements—Note 2. Acquisition of Wyeth.
`
`(cid:129) Analysis of the Consolidated Statements of Income. This section, beginning on page 16, provides an analysis of our revenues and
`products for the three years ended December 31, 2009, including an overview of important product developments; a discussion about
`our costs and expenses; and a discussion of Adjusted Income, which is an alternative view of performance used by management.
`
`(cid:129) Financial Condition, Liquidity and Capital Resources. This section, beginning on page 35, provides an analysis of our consolidated
`balance sheets as of December 31, 2009 and 2008, and consolidated cash flows for each of the three years ended December 31,
`2009, 2008 and 2007, as well as a discussion of our outstanding debt and other commitments that existed as of December 31, 2009.
`Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future
`activities.
`
`(cid:129) New Accounting Standards. This section, beginning on page 39, discusses accounting standards that we recently have adopted, as
`well as those that recently have been issued but not yet adopted by us.
`
`(cid:129) Forward-Looking Information and Factors That May Affect Future Results. This section, beginning on page 39, provides a description of
`the risks and uncertainties that could cause actual results to differ materially from those discussed in forward-looking statements
`presented in this Financial Review relating to our financial results, operations and business plans and prospects. Such forward-looking
`statements are based on management’s current expectations about future events, which are inherently susceptible to uncertainty and
`changes in circumstances. Also included in this section are discussions of Financial Risk Management and Legal Proceedings and
`Contingencies.
`
`Overview of Our Performance and Operating Environment
`
`Our Business
`
`On October 15, 2009, we completed our acquisition of Wyeth. Our mission continues to be to apply science and our global
`resources to improve health and well-being at every stage of life. We strive to set the standard for quality, safety and value in the
`discovery, development and manufacturing of medicines for people and animals. Our diversified global healthcare portfolio includes
`human and animal biologic and small molecule medicines and vaccines, as well as nutritional products and many of the world’s
`best-known consumer products. Every day, we work across developed and emerging markets to advance wellness, prevention,
`treatments and cures that challenge the most feared diseases of our time. We also collaborate with other biopharmaceutical
`companies, healthcare providers, governments and local communities to support and expand access to reliable, affordable
`healthcare around the world. Our revenues are derived from the sale of our products, as well as through alliance agreements, under
`which we co-promote products discovered by other companies.
`
`In accordance with Pfizer’s international year-end, the financial information included in our consolidated financial statements for our
`subsidiaries operating outside the United States (U.S.) is as of and for the year ended November 30 for each year presented.
`
`The acquisition of Wyeth was a cash-and-stock transaction valued, based on the closing market price of Pfizer’s common stock on
`the acquisition date, at $50.40 per share of Wyeth common stock, or a total of approximately $68 billion. Our financial statements
`reflect the assets, liabilities and operating results of Wyeth commencing from the acquisition date. In accordance with our domestic
`and international fiscal year-ends, approximately two-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth’s
`domestic operations and approximately one-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth’s
`international operations are included in our consolidated financial statements for the year ended December 31, 2009.
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`2009 Financial Report
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
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`Our 2009 Performance
`
`In 2009, there were significant events and factors impacting almost all income statement elements. Our 2009 revenues increased
`compared to 2008, primarily due to the addition of legacy Wyeth products from the closing of the acquisition on October 15, 2009
`through Pfizer’s international and domestic year-ends. Also, in 2009, we continued to face an extremely competitive environment in
`the biopharmaceutical industry. Details of our 2009 performance follow:
`
`(cid:129) Revenues of $50.0 billion increased by approximately $1.7 billion compared to 2008, primarily due to:
`
`O revenues from legacy Wyeth products of $3.3 billion; and
`
`O net revenue growth of legacy Pfizer products of $247 million,
`
`partially offset by:
`
`O the unfavorable impact of foreign exchange, which decreased revenues by approximately $1.8 billion in 2009.
`
`The significant impacts on revenues for 2009, compared to 2008, are as follows:
`
`(MILLIONS OF DOLLARS)
`Lipitor(a)
`Norvasc(b)
`Camptosar(b)
`Chantix/Champix(c)
`Zyrtec(b)
`Celebrex
`Detrol/Detrol LA
`Aricept(d)
`Viagra
`Revatio
`Sutent
`Hemophilia family(e)
`Zosyn/Tazocin(e)
`Premarin family(e)
`Lyrica
`Prevnar/Prevenar 7(e)
`Enbrel (outside the U.S. and Canada)(e)
`Effexor(e)
`Alliance revenues(f)
`Animal heath products(g)
`Consumer healthcare products(e)
`Nutrition products(e)
`
`2009 vs. 2008
`INCREASE/
`(DECREASE)
`$(967)
`(271)
`(231)
`(146)
`(129)
`(106)
`(60)
`(50)
`(42)
`114
`117
`145
`184
`213
`267
`287
`378
`520
`674
`(61)
`494
`191
`
`% CHANGE
`(8)
`(12)
`(41)
`(17)
`(100)
`(4)
`(5)
`(10)
`(2)
`34
`14
`*
`*
`*
`10
`*
`*
`*
`30
`(2)
`*
`*
`
`(a) Lipitor was unfavorably impacted primarily by foreign exchange, as well as competitive pressures and other factors.
`(b) Zyrtec/Zyrtec D lost U.S. exclusivity in late January 2008, at which time we ceased selling this product. Camptosar lost exclusivity in the U.S. in
`February 2008 and in Europe in July 2009. Norvasc lost exclusivity in Japan in July 2008 and Canada in July 2009.
`(c) Chantix/Champix has been negatively impacted by changes to its label in 2008 and additional label changes in July 2009 (see the
`“Revenues—Biopharmaceutical—Selected Product Descriptions” section of this Financial Review).
`(d) Represents direct sales under our license agreement with Eisai Co., Ltd.
`(e) Legacy Wyeth products and operations.
`(f) 2009 includes Enbrel sales in the U.S. and Canada.
`(g) Includes legacy Wyeth products.
`* Calculation not meaningful.
`
`(cid:129) Income from continuing operations was $8.6 billion in 2009 compared to $8.0 billion in 2008, reflecting:
`
`O increased revenues, primarily as a result of revenues from legacy Wyeth products;
`
`O the non-recurrence of a $2.3 billion, pre-tax and after-tax, charge in 2008 related to the resolution of certain investigations concerning
`Bextra and various other products and the non-recurrence of a $640 million after-tax charge in 2008 related to the resolution of
`certain litigation involving our non-steroidal anti-inflammatory drugs (NSAID); and
`
`O lower costs incurred in connection with our cost-reduction initiatives,
`
`largely offset by:
`
`O the unfavorable impact of foreign exchange;
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
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`O higher net interest expense, mainly due to the issuance of approximately $24 billion in senior unsecured notes during the first half of
`2009 to partially finance the acquisition of Wyeth, as well as lower interest income;
`
`O an increase in the 2009 effective tax rate, attributable mainly to increased tax costs associated with certain business decisions
`executed to finance the acquisition of Wyeth, net of a $556 million tax benefit related to the sale of one of our biopharmaceutical
`companies, Vicuron Pharmaceuticals, Inc. (Vicuron), and a $174 million favorable income tax adjustment; and
`
`O higher purchase accounting adjustments and acquisition-related costs.
`
`Our Operating Environment, Strategy and Responses to Key Opportunities and Challenges
`
`Our Operating Environment
`
`Industry-Specific Challenges
`The majority of our revenues come from the manufacture and sale of Biopharmaceutical products. The biopharmaceutical industry is
`competitive and requires us to address a number of industry-specific challenges, which can significantly impact the sales of our
`products. These factors include among others: the loss or expiration of intellectual property rights, the regulatory environment and
`pipeline productivity, pricing and access pressures and increasing competition among branded products.
`
`The Loss or Expiration of Intellectual Property Rights—As is inherent in the biopharmaceutical industry, the loss or expiration of
`intellectual property rights can have a significant adverse effect on our revenues. Many of our products have multiple patents that
`expire at varying dates, thereby strengthening our overall patent protection. However, once patent protection has expired or has
`been lost prior to the expiration date as a result of a legal challenge, we lose exclusivity on these products and generic
`pharmaceutical manufacturers generally produce similar products and sell them for a lower price. This price competition can
`substantially decrease our revenues for products that lose exclusivity, often in a very short period of time. While small molecule
`products are impacted in such a manner, biologics currently have additional barriers to entry related to the manufacture of such
`products and therefore generic competition may not be as significant. A number of our current products, including Lipitor, Effexor
`and Zosyn are expected to face significantly increased generic competition over the next few years.
`
`Regulatory Environment and Pipeline Productivity—The discovery and development of safe, effective new products, as well as the
`development of additional uses for existing products, are necessary for the continued strength of our businesses. We are confronted
`by increasing regulatory scrutiny of drug safety and efficacy, even as we continue to gather safety and other data on our products,
`before and after the products have been launched. Our product lines must be replenished over time in order to offset revenue losses
`when products lose their exclusivity, as well as to provide for revenue and earnings growth. We devote considerable resources to
`research and development (R&D) activities. These activities involve a high degree of risk and may take many years, and with
`respect to any specific research and development project, there can be no assurance that the development of any particular product
`candidate or new indication for an in-line product will achieve desired clinical endpoints and safety profile or will be approved by
`regulators and lead to a successful commercial product.
`
`Pricing and Access Pressures—Governments, managed care organizations and other payer groups continue to seek increasing
`discounts on our products through a variety of means such as leveraging their purchasing power, implementing price controls, and
`demanding price cuts (directly or by rebate actions). Also, health insurers and benefit plans continue to limit access to certain of our
`medicines by imposing formulary restrictions in favor of the increased use of generics. Legislative changes have been proposed that
`would allow the U.S. government to directly negotiate prices with pharmaceutical manufacturers on behalf of Medicare beneficiaries,
`which we expect would restrict access to and reimbursement for our products. There have also been a number of legislative proposals
`seeking to allow importation of medicines into the U.S. from countries whose governments control the price of medicines, despite the
`increased risk of counterfeit products entering the supply chain. If importation of medicines is allowed, an increase in cross-border trade in
`medicines subject to foreign price controls in other countries could occur and negatively impact our revenues. Also, healthcare reform in
`the U.S., if enacted, could increase pricing and access restrictions on our products and could have a significant impact on our business.
`
`Competition among Branded Products—Many of our products face competition in the form of branded products, which treat similar
`diseases or indications. These competitive pressures can have an adverse impact on our future revenues.
`
`The Overall Economic Environment
`In addition to industry-specific factors, we, like other businesses, continue to face the effects of the weak economy. The impact of
`the weak economy on our Biopharmaceutical operations has been largely in the U.S. market, affecting the performance of products
`such as Lipitor, Celebrex and Lyrica. We believe that patients, experiencing the effects of the weak economy, including high
`unemployment levels, and increases in co-pays sometimes are switching to generics, delaying treatments, skipping doses or using
`less effective treatments to reduce their costs. The weak economy also has increased the number of patients in the Medicaid
`program, under which sales of pharmaceuticals are subject to substantial rebates and, in many states, to formulary restrictions
`limiting access to brand-name drugs, including ours. Our Diversified business consisting of Animal Health, Consumer Healthcare,
`Nutrition and Capsugel, also has been impacted by the weak economy, which has adversely affected global spending on veterinary
`care and on personal healthcare products.
`
`Despite the challenging financial markets, Pfizer maintains a strong financial position. We have a strong balance sheet and liquidity
`that we believe provide us with financial flexibility. Our long-term debt is rated high quality and investment grade by both Standard &
`Poor’s and Moody’s Investors Service. As market conditions change, we continue to monitor our liquidity position. We have and will
`continue to take a conservative approach to our financial investments. Both short-term and long-term investments consist primarily
`of high-quality, highly liquid, well-diversified, investment-grade available-for-sale debt securities. As a result, we continue to believe
`that we have the ability to meet our liquidity needs for the foreseeable future. For further discussion of our financial condition, see
`the “Financial Condition, Liquidity and Capital Resources” section of this Financial Review.
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`2009 Financial Report
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
`
`Our Strategy
`
`Wyeth Acquisition
`In response to the challenging operating environment, we have taken many steps to strengthen our Company and better position
`ourselves for the future. The most important of these steps was the acquisition of Wyeth, which has transformed us into a more
`diversified healthcare company, with product offerings in human, animal and consumer health, including vaccines, biologics, small
`molecules and nutrition across developed and emerging markets. We believe that our acquisition and integration of Wyeth
`meaningfully advances, in a single transaction, each of the strategic priorities that we have identified and pursued over the last two
`years, including:
`
`(cid:129) Enhancing our in-line and patent-protected pipeline portfolio in key “invest to win” areas where there exist significant unmet medical
`needs and significant opportunities for innovation and market leadership, such as oncology, pain, inflammation, Alzheimer’s disease,
`psychoses and diabetes, as well as the critical technologies of vaccines and biologics;
`
`(cid:129) Becoming a top-tier biotherapeutics company by 2015;
`(cid:129) Accelerating growth in emerging markets;
`(cid:129) Creating new opportunities for established products;
`(cid:129) Investing in complementary businesses; and
`(cid:129) Creating a lower, more flexible cost base for the combined company.
`
`We believe the realization of these strategic priorities through the acquisition of Wyeth enhances opportunities for us to:
`
`(cid:129) Drive improved performance through our unique and flexible business model—which is built on a group of agile, highly accountable
`units all backed by the scale and resources of our global enterprise.
`
`(cid:129) Strengthen the opportunity for consistent and stable revenue and earnings growth through product offerings in numerous growing
`therapeutic areas and a diversified product portfolio in which it is expected that no drug will account for more than 10% of our revenues
`in 2012.
`
`(cid:129) Strengthen our ability to deliver on the true growth driver in our business—meeting the unmet medical needs of patients, doctors and
`other customers through a robust and growing pipeline of biopharmaceutical development projects, the combination of top scientists
`from both legacy companies, leading scientific and manufacturing capabilities, a global network of proof-of-concept clinical
`development centers, and a newly reorganized research and development organization.
`
`(cid:129) Take advantage of rapidly advancing scientific innovation into new and more complex areas in order to address continuing substantial
`unmet medical needs.
`
`(cid:129) Take advantage of current demographics of developed countries which indicate that people are living longer and, therefore, have a
`growing demand for high-quality healthcare and the most effective medicines.
`
`Other Responses to Industry-Specific Challenges
`We believe that our medicines provide significant value for both healthcare providers and patients, not only from the improved
`treatment of diseases but also from a reduction in other healthcare costs, such as emergency room or hospitalization costs, as well
`as improvements in health, wellness and productivity. We continue to actively engage in dialogues about the value of our products
`and how we can best work with patients, physicians and payers to prevent and treat disease and improve outcomes. We will work
`within the current legal and pricing structures, as well as continue to review our pricing arrangements and contracting methods with
`payers, to maximize access to patients and minimize any adverse impact on our revenues.
`
`We continue to be a constructive force in helping to shape healthcare policy and the appropriate regulation of our products. Although
`we cannot predict the outcome of U.S. healthcare reform initiatives, we remain committed and actively engaged in discussions to
`reform healthcare in a way that expands coverage for those currently uninsured; does not erode coverage for those currently
`insured; improves quality; rewards innovation; and provides value for patients. During the second quarter of 2009, the
`Pharmaceutical Research and Manufacturers of America (PhRMA), of which we are a member, announced an $80 billion
`commitment over the next decade to support healthcare reform in the U.S. Among other things, that commitment includes reducing
`the cost of medicines for seniors and disabled Americans who are affected by the coverage gap in the Medicare prescription drug
`program. The PhRMA commitment is intended to be part of any federal healthcare reform legislation in the U.S.
`
`We continue to aggressively defend our patent rights against increasingly aggressive infringement whenever appropriate (see Notes
`to Consolidated Financial Statements—Note 19. Legal Proceedings and Contingencies), and we will continue to support efforts that
`strengthen worldwide recognition of patent rights while taking necessary steps to ensure appropriate patient access. In addition, we
`will continue to employ innovative approaches to prevent counterfeit pharmaceuticals from entering the supply chain and to achieve
`greater control over the distribution of our products, and we will continue to participate in the generics market for our products,
`whenever appropriate, once they lose exclusivity.
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
`
`We have evolved our Biopharmaceutical operations into smaller, more focused units to anticipate and respond more quickly to our
`customers’ and patients’ changing needs. With the formation of the Primary Care, Specialty Care, Established Products, Oncology
`and Emerging Markets units, we believe we can better manage our products’ growth and development from proof-of-concept
`throughout their entire time on the market; bring innovation to our “go to market” promotional and commercial strategies; develop
`ways to further enhance the value of mature products, including those close to losing their exclusivity; expand our already
`substantial presence in emerging markets; and create product-line extensions where feasible.
`
`We continue to develop and deliver innovative medicines that will benefit patients around the world. We continue to make the
`investments that we believe are necessary to serve patients’ needs and to generate long-term growth. For example:
`
`(cid:129) We have reorganized our R&D organization, which now consists of two distinct groups; the PharmaTherapeutics Research &
`Development group, which focuses on the discovery of small molecules and related modalities and; the BioTherapeutics Research &
`Development group, which focuses on large-molecule research, including vaccines. Together, we believe these groups will help
`maximize new opportunities in biopharmaceutical research.
`
`(cid:129) We announced that we would reduce our R&D site footprint by 35% through the closing of six R&D sites and consolidation of four
`others. Once these actions are complete, we expect to have an R&D biomedical presence in the U.S., Europe, Canada and China with
`five major sites and nine specialized units.
`
`(cid:129) We have prioritized our portfolio with a focus on the “invest to win” areas, as well as vaccines and biologics. Approximately 70% of our
`research projects and 75% of our late-stage portfolio are focused on these areas.
`
`(cid:129) We continue to conduct research on a significant scale in an effort to discover and develop new medicines. As of January 27, 2010,
`reflecting the acquisition of Wyeth, our R&D pipeline includes about 500 projects in development ranging from discovery through
`registration, of which 133 programs are from Phase 1 through registration. The projects within our “invest to win” areas include 30
`compounds for various oncology indications, 10 compounds for Alzheimer’s disease, eight compounds for pain, 11 compounds for
`inflammation, six vaccines and 27 biologics.
`
`(cid:129) We met our legacy Pfizer goals made in March 2008 to initiate 10 to 12 Phase 3 starts between March 2008 and March 2009, to initiate
`15 Phase 3 starts in the 2008 to 2009 period and to have 24 to 28 new molecular entities and new indications in the Phase 3 pipeline
`by the end of 2009. With the addition of Wyeth, the new combined company pipeline has a total of 34 new molecular entities and new
`indications in Phase 3. For further information about our pending new drug applications (NDA) and supplemental filings, see the
`“Revenues—Product Developments” section of this Financial Review.
`
`(cid:129) While a significant portion of R&D is done internally, we continue to seek to expand our pipeline by entering into agreements with other
`companies to develop, license or acquire promising compounds, technologies or capabilities. Collaboration, alliance and license
`agreements and acquisitions allow us to capitalize on these compounds to expand our pipeline of potential future products.
`
`Our Cost-Reduction Initiatives
`
`Since the acquisition of Wyeth, we are focused on achieving an appropriate cost structure for the combined company, which
`includes capturing synergies company-wide. We anticipate the cost-reduction initiatives that were announced on January 26, 2009,
`to achieve a reduction in adjusted total costs of approximately $3 billion, at 2008 average foreign exchange rates, compared with our
`2008 adjusted total costs of $28.6 billion (for an understanding of Adjusted income, see the “Adjusted Income” section of this
`Financial Review). We plan to reinvest approximately $1 billion of these savings in the business, resulting in an expected $2 billion
`net cost reduction. Additionally, as a result of the Wyeth acquisition, Pfizer expects to generate synergies of approximately $4 billion
`by the end of 2012, which is expected to result in $2 billion to $3 billion in net cost savings after reinvestment in the business, by the
`end of 2012. In the aggregate, as we combine these two initiatives into one comprehensive program, we expect to generate gross
`cost reductions of approximately $7 billion, resulting in net cost reductions of approximately $4 billion to $5 billion, by the end of
`2012, at 2008 average foreign exchange rates, in comparison with the 2008 pro-forma combined adjusted total costs of Pfizer and
`the legacy Wyeth operations.
`
`These targeted savings are expected to be achieved through the following actions:
`
`(cid:129) The closing of duplicative facilities and other site rationalization actions company-wide, including research and development facilities,
`manufacturing plants, sales offices and other corporate facilities.
`
`O Research and Development Sites––In combining the R&D organizations of Pfizer and Wyeth, we have identified changes that we
`expect will increase productivity of the R&D organization and reduce costs. As of the closing of the acquisition of Wyeth, we operated
`in 20 R&D sites. In the fourth quarter of 2009, we announced that we would close six sites, and once these actions are completed,
`R&D will be conducted at five major sites and nine specialized units around the world.
`
`O Manufacturing Sites—Our global manufacturing network is a global strategic supply network consisting of our internal network of
`plants together with strategic external manufacturers and including purchasing, packaging and distribution. As of December 31,
`2009, operational manufacturing sites totaled 81. We will continue to rationalize our internal network of plants around the world
`resulting in a more focused, streamlined and competitive manufacturing operation.
`
`(cid:129) Workforce reductions across all areas of our business and other organizational changes.
`
`O We have identified areas for a reduction in workforce across all of our businesses. As of the closing of the Wyeth acquisition, the
`combined workforce was approximately 120,700 and, as of December 31, 2009, the workforce had decreased to 116,500.
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`2009 Financial Report
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
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`(cid:129) The increased use of shared services.
`(cid:129) Procurement savings.
`
`We have incurred and will continue to incur costs associated with these cost-reduction activities and estimate that these costs could
`be in the range of approximately $11.5 billion to $13.5 billion through 2012, of which we have incurred approximately $5.5 billion in
`cost reduction and acquisition-related costs (excluding transaction costs) through December 31, 2009.
`
`Our Strategic Initiatives—Strategy and Recent Transactions
`
`Acquisitions, Dispositions, Licensing and Collaborations
`
`We are committed to capitalizing on growth opportunities by advancing our own pipeline and maximizing the value of our in-line
`products, as well as through strategic and opportunistic licensing, co-promotion agreements and acquisitions. Our business-
`development strategy targets a number of potential growth opportunities, including biologics, vaccines, oncology, diabetes,
`Alzheimer’s disease, inflammation/immunology, pain, psychoses, and other products and services that seek to provide valuable
`healthcare solutions across developed and emerging markets. Some of our most significant business-development transactions
`since 2007 are described below.
`
`(cid:129) On October 15, 2009 (the acquisition date), we acquired all of the outstanding equity of Wyeth in a cash-and-stock transaction, valued,
`based on the closing market price of Pfizer common stock on the acquisition date, at $50.40 per share of Wyeth common stock, or a
`total of approximately $68 billion. We are required to divest certain animal health assets in connection with the regulatory approval
`process associated with our acquisition of Wyeth. As a result, in October 2009, we sold certain animal health products, research and
`manufacturing facilities located primarily in Fort Dodge, Iowa, as well as related assets and intellectual property, primarily from Wyeth’s
`Fort Dodge Animal Health portfolio in the U.S. and Canada to Boehringer Ingelheim (BI). The products primarily included cattle and
`small animal vaccines and some animal health pharmaceuticals. BI also acquired from us certain animal health assets in other
`jurisdictions, including companion animal vaccines in Australia, and cattle vaccines in Europe and South Africa, all of which are
`primarily manufactured at the Fort Dodge, Iowa site. In January 2010, we completed the divestiture of the legacy Fort Dodge Animal
`Health livestock business and certain related assets in Australia. In February 2010, we entered into an agreement for the divestiture of
`certain animal health assets in China, completion of which is subject to regulatory approval and other closing conditions. In the
`European Union, Switzerland and Mexico, in connection with the regulatory approval process associated with our acquisition of Wyeth,
`we are also required to divest certain other animal health assets for which we have not yet entered into definitive transaction
`agreements. It is possible that additional divestitures of animal health assets may be required based on ongoing regulatory reviews in
`other jurisdictions worldwide.
`
`While Wyeth is now a wholly owned subsidiary of Pfizer, the merger of local Pfizer and Wyeth entities may be pending or delayed
`in various jurisdictions and integration in these jurisdictions is subject to completion of various local legal and regulatory
`obligations.
`
`For additional information related to our acquisition of Wyeth, see the “Acquisition of Wyeth” section of this Financial Review and
`see Notes to Consolidated Financial Statements—Note 2. Acquisition of Wyeth.
`
`(cid:129) In April 2009, we announced that we entered into an agreement with GlaxoSmithKline plc (GSK) to create a new company focused
`sole